WASHINGTON, Dec 10: Buffeted by foreign competition, two leading US steelmakers announced on Sunday they had begun merger talks as part of efforts to achieve greater consolidation of the national steel industry.

In statement released simultaneously in Pittsburgh, Pennsylvania, and Mishawaka, Indiana, the US Steel and National Steel corporations added that the deal was not yet in the offing.

But US Steel acknowledged that it had entered talks with NKK Corporation of Japan, the owner of National Steel, regarding a possible acquisition of the Indiana-based concern.

Any acquisition would be contingent on a number of significant conditions, including a substantial restructuring of National Steel’s debt and other obligations, US Steel cautioned.

The Pittsburgh-based company said it will proceed with the deal “only if the acquisition would be in the best interests” of its shareholders, customers, employees and creditors.

National Steel stressed, for its part, that the potential deal was subject to significant risks and uncertainties, and there can be no assurance that a definitive agreement will be entered into.

National Steel is one of the nation’s largest producers of carbon flat-rolled steel products, with annual output reaching approximately six million tons.

US Steel, a subsidiary of USX Corporation, reported a net loss of $18 million in the third quarter of this year, despite the strong performance of its recent acquisition, a giant steel mill in Kosice, Slovakia.

The announcement comes as several key US steelmakers are involved in talks among themselves and labour unions to achieve what they call a major integrated steel industry consolidation in the face of mounting competition from European and Asian producers.

As foreign firms flood the US market with their steel products, the industry has seen about 25 US companies file for Chapter 11 bankruptcy protection since 1998 in a bid to stay afloat, according to the American Iron and Steel Institute.

The operating assets of our country’s major steel companies have been put at great risk by excessive levels of steel imports that have seriously injured the industry as a whole, said Robert Miller, chairman and chief executive officer of the Pennsylvania-based Bethlehem Steel Corporation.

Miller acknowledged last Thursday that his company was also pursuing consolidation talks with US Steel.

US steel industry chieftains have made it clear that their contemplated mergers would remain on the drawing board if the US government did not help them defray at least part of the so-called retiree legacy costs.

US Steel also made clear that its acquisition of National Steel could become possible if it succeeded in securing a labor agreement that would provide for meaningful reductions in operating costs.

But United Steelworkers of America President Leo Gerard said that, while the union was committed to “a rational consolidation,” any restructuring must preserve the jobs of the workers.—AFP